The Waffle: Aberrations

Crypto is the Aberration. Blockchain is Forever.

The idea that crypto will change the world is a long-standing truism among us Bitcoin aficionados. A fairer world, a better world, a decentralized world, yada yada yada. Just like the Internet was to revolutionize society by giving everyone the world market at their fingertips, crypto was supposed to change, well, everything. Move money faster, better, safer, and fairer.

There is one problem here. It hasn't. Bitcoin isn't a payment system, money isn't safer on chain, and fairness? Don't make me laugh. The big financial players are developing their own narrative around blockchain faster than you can say hashing. At every step, the well-connected, ruthless and immoral agents win in crypto. Half the exchanges are run by Russian mob money, the good ones are hardly being used. Solid projects die for lack of marketing, fair launches are ignored, while VC pumps and meme coin crap flourishes. None of the original crypto punk narratives is still in tact. Not a single one. As a crypto idealist, it's sometimes hard for me to watch the this spectacle of depravity, greed, and nonsense. But there are more concrete reasons why the crypto years will end up as a historical anomaly.

We all live in a world where some people have power, and others don’t. That power may derive from brawn or brain, violence or acceptance, exclusion or inclusion. I may be tribal or intellectual, plain to see or hidden in secretive networks. It may be embodied in a brutal dictatorship like China, or a softly-trading democracy like Denmark. It may be an empire of might led by senile puppet, or and empire of light, led by Messianic visionaries. But what it always has is rules: arbitrary once, enlightened ones, the rules of nature or the rule of law. In order to gain power, you need weapons or guile; to keep it, you need money and rules. Those who are in power are familiar with these rules, made them, used them, and abused them. They educate those not in power and indoctrinate them with their rules. If everbody believes the rules, the powerful stay in power.

The same is true in finance -- both the science and circus of money -- which makes the world go round. We have rules for cash, for credit, the transfer of money, its issuance, all the financial instruments associated with it. No matter what shape or form the money takes, it always must have a certain value that is intrinsic (a dollar note) or calculable (a stock or bond), but always is discoverable from the asset itself. A bank note has a number on it, and the number allows you to by items in a store with more numbers on them. Everything has value, and that value should be easy to ascertain. If there is no way to decide a thing’s value, there is no reason to accumulate the thing.

This is the main criticism of crypto. The value of financial freedom and a fairer world is intangible, invisible, and certainly not of interest to those in power. We have played their game by avoiding to talk about the profit aspect of crypto (ie security or not, in American speak). But if something doesn’t want to make profit, where’s the value. The idea of a utility token with no rising value isn’t particularly attractive to investors. Most crypto is impossible to value, and thus doesn’t fit into the set of rules the powerful have made.

The launch of ETFs was a big step for the takeover of crypto. It no longer matters what Bitcoin is or does, it is now just an asset class. ETFs earn fees, which is value that can be measured. The value of Bitcoin is whatever we believe it to be, but the value of fees is clear, provable, and taxable. The launch of ETFs by big financial institutions isn’t an endorsement of Bitcoin, it’s an endorsement of fiat fees.

This, incidentally is the reason for meme coins. Since you can’t assign value to crypto assets other than hype and community, useless coins with popular following are the perfect investment as long as they run. Worthless memes are the only thing worth investing!

The next step in the takeover of crypto by the powers that be is to make it worthless as collateral. In a financial system that needs credit like an organism needs air, getting “fiat” loans (say in a stablecoin) against a speculative crypto asset is undermining the power model. Crypto lending will soon be outlawed, and especially the use of any crypto asset as a collateral. A large part of DeFi will disappear overnight.

The final step in the takeover of crypto is the unmentionable. Blockchains are not always “projects of passion,” they are lead by people who want or need to make money off them. Without payments in fiat money to hotels and airlines, no crypto conferences. Without distribution of tokens to founders, selling them for hard cash to pay for baby formula and mortgages, what’s the point.? Very very very few people are in this for the crypto ideology. Most are in it for the same reason they do everything else: money. But it turns out that crypto isn't money. It could be, if the regulators in power would let it. But they won't. They need to protect consumers, banks, and the incumbent from any threat to their power. A consequent following of the crypto path would lead to social unrest and revolution. We can't have that.

Crypto was started by visionaries, academics, and tinkerers. It was taken over by get-rich-quickly dreamers, fraudsters, and crooks. Responsible, transparent players like Uphold are the exemption, not the rule. Transparency was supposed to be a hallmark of immutable blockchain. In reality, the crypto busy is even murkier than the construction business. Crypto socials are filled with anonymous degens. The Gen-Z spirit of gameficiation doesn't care about hashing algorithm and the beauty of decentralized networks. They are about likes, shares, followers ... and money.

The majority of crypto projects are being built to raise money and make money. That undeniable fact alone makes all blockchains securities as long as they follow the accepted model of team, ICO, unlocking schedule, etc. Only fair launched projects with no legal structure whatsoever, like Bitcoin or Kaspa, are exempt. EU MiCA regulation already recognizes this. The US will fall in line. As it does, the part of crypto that is clearly a security will first fall apart, then reassemble as proper for-profit companies that actually need a use case, a business model, a cash flow and thus an actual value derived from the product. The age of crypto wiffwaffery will be over, as all the different crypto models are made to fit existing rules, just like the Swiss regulatory system recognized very early on: we powerful won’t let new laws erode our power. Everything has to fit into the existing framework that made us powerful. The aberration will be squashed.

The only thing that can change that is a revolution. And a revolution with this Instagram short-attention-span, politically numb, egotistical and self-centered, entitled and hedonistic Gen-Z? Good luck with that. They won’t fight for their financial freedom if it involves anything more than a click on a phone. They certainly won’t man the barricades.

Yet of this is to be confused with blockchain technology, tokenization, and the value of decentralized? network. They are now firmly established, and those are technologies that are here to stay. In this sense, crypto is the aberration, and blockchain is the future.